other, it is certain that losses arise much more frequently from defective or inadequate methods of distribution than of production. Theoretically, the power of people to consume should equal their power to produce. That the actual power to consume does not equal the theoretical power may be owing, in part, to the want of a proper balance, or equilibrium, in production. In the latter, however, the best methods will almost always be used. No one would assume to be a manufacturer without putting machinery into a building which he might erect; while nothing is more common than a currency discharged of all representative value. Such a currency is the great disturbing element in distribution, and none so much so as one issued by a government. That it, without a dollar at its command, can issue bills to serve in exchanges between nations is too absurd for belief; yet it is really no more absurd for it to issue such bills than to issue its notes to serve as currency in domestic trade. If its bills issued for use in foreign exchanges were treated as capital, as possessing a value in coin equal to their nominal amount, it would not be long before the trade in which they were used would become so involved in confusion, and the loss of all parties to it so excessive, that all foreign commerce would come to a stand, not to move again till the fictitious bills had been got rid of, and new and adequate ones had taken their place. So with domestic trade. The issue and use of the notes of government, representing nothing but debt, would in the end produce results precisely similar to those following the use of fictitious bills. The transactions for which they were used, resting on no adequate foundation, would never produce the results predicated of them; and no great length of time would elapse before the affairs of the community would become so involved, and such losses would be suffered, as in great measure to arrest all business operations. If it were free to act in reference to its interests, it would speedily rid itself of the mischievous instruments, and substitute adequate ones in their place. Till such substitution was made, no real amendment or relief would be possible.

The great call, and apparent necessity, in countries where the currency is one of government notes, and consequently irredeemable, is for a flexible currency,-one always adapted to the demand. At periods when the crops are being moved, a

great deal more currency is required than at others. Why, it is asked, should it not be made to correspond, in amount, to the transactions that are taking place, instead of being fixed. at an unvarying sum? and governments issuing it are always importuned, whenever there is a great stringency, to interpose and increase the amount, and relieve a pressure so detrimental to all.

As already shown, a symbolic currency rises and falls in amount with the value of the merchandise symbolized. If the value of wheat received at Chicago for shipment to the Eastern markets for the present year (1877) be double that received for the same purpose in 1876, bills twice in number, or amount, will be drawn the present year over those drawn the year previous. The currency of bills in both years must correspond to the amount, in value, of the exports. The currency issued by the Banks in discounting such bills would equal their nominal value, or that of the merchandise they represented. The local instruments, consequently, would correspond to the means of consumption. If, on the other hand, the crop of wheat exported from Chicago the present year equals only one-half that exported in 1876, only one-half the bills in number, or amount, will be drawn the present, as were drawn the previous, year. As a necessary consequence, only one-half the amount of local currency will be created. In either case the currency would have, in the highest degree, the attribute of flexibility, as it would correspond perfectly to the amount of merchandise to be moved. No small amount of inconvenience and suffering might result from a great falling off in value of the exports, and a corresponding reduction in the volume of the currency; but no one would venture to suggest that the latter was in any way in fault, or that there was any method of relief but better prices or better crops.

As already shown, a currency of government notes differs wholly in kind from one based upon merchandise. As it bears no relation to the means of the community upon which it is imposed, it is justly chargeable with a want of flexibility. An increase in its amount to meet an extraordinary call, or stringency, only serves to increase the degree of its inflexibility. With every increase of issue prices rise, so that the currency, relatively, is no more abundant for such increase. In a very short time, prices of all kinds of property are adjusted to the

new level. With every increase of the currency, however, the resources of the people are diminished in like ratio, increasing in like degree the difficulty that those in debt, and from whom the clamor of inflexibility always comes, find in borrowing capital, or the notes in circulation, which are capital to their possessor to the amount of their market value. The meaning of inflexibility, consequently, is a lack of capital. The demand for flexibility is only a demand for a greater quantity of capital; or that which, at some price, will serve as capital: with every additional issue the demand necessarily increases in intensity, from the increased impoverishment of the community that has been suffered.

As the value of currencies has been held by all writers to depend upon their quantity, the remedy proposed, to restore their value when depreciated, has been to reduce their amount; or to cease issuing till the increase in number or magnitude of the exchanges, due to an increase of production, shall not only give full employment to the amount in circulation, but require an additional quantity. Such is a necessary conclusion from premises which assume value, either intrinsic or representative, to be no necessary attribute of money. In illustration, it is said that if there are too many yardsticks in a community, a part of them must remain in abeyance till the increase, in the number of yards to be measured, will give employment to all. The price, which has been depreciated from an excess in number, will then rise so as to equal cost.

It has been shown that the value of money is the quality or attribute which measures the value of other things; that, unlike the yardstick, it always, when used, passes in exchange for the value of that which it measures. Yardsticks and

weights do not measure values, but space or quantity. Neither do we say that one place is so many dollars distant from another, or that a coat is worth so many yardsticks. Yet it would be just as absurd for government to measure space by dollars, and values by yardsticks, as to declare that its notes, payable at a future day without interest, shall have a value. equal to that of coin. Governments cannot change or avoid the operations of natural laws. It would be mere brutum fulmen for them to declare that, after a certain period, equal quantities of copper and gold should have the same price. That of

each will always be regulated by its value, real or estimated. Government notes bear no relation to the amount of capital of a community, nor will they ever bear any relation to such amount. They will be just as much out of place ten years after, as on the day in which they were issued. No increase of exchanges will increase their value. They are never issued in the outset with a view of facilitating exchanges, but always as a forced loan. They are always suggested by the necessities of government. There never was any other ground for their issue. No community ever lacked the means of exchange that possessed the proper subjects of exchange, merchandise in demand for consumption. These will give their possessors all the money-gold and silver- they are entitled to for any purpose. In highly civilized countries only a small amount of these metals is used as currency, exchanges being in great measure effected by the use of symbols. A currency of government notes, therefore, is always superfluous. An increase of exchanges twenty-fold, within the period during which they are in circulation, will no more increase their value than it will raise the price of other articles above their value. The price of a currency issued by Banks is always regulated by its value. If from any cause it is depreciated twenty-five per cent, an increase in the number of exchanges will not exert the least influence in increasing its value. If a metallic currency is debased, it will be taken only at the value of the pure metal it contains. No increase of exchanges will exert the slightest influence over its price. The media of exchange are the things exchanged; they mutually measure the value of each other, whether they be coin or merchandise. The idea, therefore, so commonly entertained, that a currency of government notes can be increased in price, can be absorbed, as the phrase is, so as to raise their value to the par of coin by increase in the number of exchanges, is one of the most preposterous and absurd ever entertained. Strange to say, no opinion has a stronger hold upon the public mind.

A's the ability of an issuer of notes to convert them depends largely upon their quantity, such quantity becomes a most important element in their price. If a government like the United States should issue $1,000,000 of its notes, these might maintain their value very nearly at par from the ability

from their issue. The notes of the Banks of the great centres of trade in the Eastern States of the United States will be readily taken in the most distant of the Western; but they will not circulate in them, as they will be immediately taken up for remittances to the Eastern States, in favor of which there is always a constant balance of indebtedness. The notes of the Banks of the Western States can never obtain circulation in the Eastern. They would be superfluous as currency in the latter, and, as they would immediately go into the Eastern Banks on deposit, they would speedily be returned to their issuers for payment in coin. Banks in all large cities make daily settlements with each other through Clearing Houses, the balances arising daily being discharged daily. Country Banks, not parties to Clearing Houses, are, no less than those that are, compelled to take in daily a portion of their circulation, or such part of it as may be in excess of the wants of the public for the distribution of merchandise. All currencies, by whomsoever issued, are subject to the same law of redemption within the time ordinarily required for the distribution of merchandise from producer to consumer.

Very different ideas, however, upon the subject of paper money prevail. It is assumed by all writers upon the subject that, as a rule, currencies will remain indefinitely in circulation provided the credit of the issuer remain unshaken. Paper money is described by all as a "credit currency." A currency could never get into circulation unless it was supposed to represent capital, and to be payable on demand in coin; but a currency with millions behind it is subject to the same necessity of redemption as one that is not supported by a single dollar (assuming, of course, that the latter circulates as currency from the credit attached to it). But for such credit it would not go into circulation at all, or it would be immediately presented for redemption in coin. This law of redemption has been wholly overlooked by all writers upon monetary science. It is the law of all convertible currencies that they must be redeemed within comparatively short periods. If they represent merchandise, they will be returned to the issuer by virtue of the purchase and consumption of such merchandise. Redemption in such case is only a mutual offset of liabilities. If not retired in this manner, it must be taken in by the Bank by the payment of a corresponding amount of its reserves.